Citi: Still positive on Greater China semiconductors after US roadshow, preferring analog, OSAT, and selected AI-chain names

Overview

This is a Citi report on the Greater China semiconductor sector summarizing US marketing takeaways. Based on feedback from meetings with more than 50 investors in New York, Boston, and San Francisco from July 13 to 17, 2026, the core observation is that US investors are very nervous about the sustainability of the upcycle in memory and AI capex, especially concerned about a slowdown in US hyperscaler capex in 2027-28, increased Chinese DRAM/NAND supply, and disruption from Chinese AI models such as Kimi K3 to the monetization and future investment outlook of US AI models. Even so, Citi believes concerns over aggressive capacity expansion by Chinese memory makers in 2026-27 are unlikely to materialize and remains positive on continued price upside in 2H26.

Core views

The core views include: first, US investors still acknowledge that the DRAM price upcycle may continue through end-2027, but are cautious on near-term risk appetite when assessing the bull/bear case from the demand side. Second, CXMT's main Hefei sites are already fully loaded, with new capacity likely having to wait until new fabs come on stream in 2027, while YMTC also has an incentive to maintain NAND prices until its IPO, so China's memory supply shock may be smaller than the market fears. Third, the price uptrend for China's analog chips may continue in 2H26, driven by price hikes from international analog vendors in April and July that accelerate domestic substitution, as well as domestic demand from networking and computing applications. Fourth, OSAT prices may continue to rise amid tight utilization; power discrete devices may also see price increases, but additional capacity from Chinese IDMs may relatively limit elasticity. Fifth, on stock selection, the preferences are Montage-A/H, ASMPT, Chroma ATE, and SG Micro.

Analysis framework

The report combines roadshow feedback with industry supply-demand analysis, company fundamentals, and relative valuation: it first summarizes US investors' main concerns about AI capex, memory supply, and Chinese AI models, then uses capacity constraints, price trends, domestic substitution, AI infrastructure demand, and company product pipelines to assess industry and stock opportunities.

Methodology notes

• Valuation methodsforward p/e multiple

  Target prices set based on 2027E P/E

  ASMPT's target price is based on 40x 2027E P/E, Chroma ATE's target price is based on 40x 2027E P/E, Montage-H's target price is based on 66x 2027E P/E, Montage-A's target price is based on 60x 2027E P/E, and SG Micro's target price is based on 61x 2027E P/E.

• Valuation methodspeg comparison

  Matching growth with valuation

  Chroma ATE's target price corresponds to close to 1x PEG, and the report believes more than 60% of its revenue is already AI-related, with growth prospects tightly linked to AI infrastructure build-out.

• Industry supply-demandcapacity and pricing cycle analysis

  Capacity constraints and price-hike cycle

  Through CXMT and YMTC's capacity ramp schedules and the supply-demand dynamics of China's analog, OSAT, and power discrete segments, the report assesses the supply shock in 2026-27 and price trends in 2H26.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• ASMPT (0522.HK)

  Selected name; beneficiary of back-end advanced packaging and semiconductor equipment

  Strengths

  AI-driven advanced packaging orders, including TCB in HBM and CoW applications; recovery in mainstream SEMI and SMT; potential disposal of the SMT business could strengthen its positioning as a leader in advanced packaging solutions and drive a rerating.

  Weaknesses

  The report does not list explicit operational weaknesses, but the investment thesis depends on continued AI infrastructure capex and sustained TCB share.

  Comparison

  The HK$250 target price is based on 40x 2027E P/E, and the report believes peak valuation can be supported by a strong recovery in revenue and earnings.

  Risks

  Delays in AI infrastructure investment, loss of TCB share at key customers, alternative technologies weakening TCB demand, intensified industry competition, and export restrictions extending to back-end equipment.

• Chroma ATE (2360.TW)

  Selected name; beneficiary of AI testing, metrology, and photonics/CPO-related equipment

  Strengths

  The report estimates that more than 60% of revenue is AI-related, with growth coming from multiple product lines such as power testers, SLT, metrology, and photonics/CPO; it has strong share in most subsegments.

  Weaknesses

  Recent profit-taking in the market has caused share price volatility, and the growth outlook is highly tied to AI infrastructure build-out.

  Comparison

  The NT$2,500 target price is based on 40x 2027E P/E, close to 1x PEG; the share price has already rerated above its historical range.

  Risks

  Weaker-than-expected AI/CPO growth, capacity or production bottlenecks, higher GPU yields reducing SLT demand, metrology shipments missing expectations, changes in test flows leading to share loss, and FX risk.

• Montage Technology (688008.SS; 6809.HK)

  Selected name; beneficiary of AI data center memory interface and connectivity solutions

  Strengths

  Fundamentals are strong, with record 2Q26 revenue and profit; the product pipeline includes RCD Gen3-4-5, MRCD/MDB, PCIe retimer/switch, and CXL; it benefits from DDR5 generational upgrades, MRDIMM, CXL, agentic AI and inference demand, as well as semiconductor localization in China.

  Weaknesses

  The H-share trading history is relatively short, and Citi's quantitative system flags high risk; however, the analyst does not assign a formal High-Risk rating to Montage-H.

  Comparison

  Montage-H's target price of HK$305 is based on 66x 2027E P/E, a 10% premium to the target multiple for Montage-A; Montage-A's target price of Rmb245 is based on 60x 2027E P/E, at 1.5 standard deviations above its 5-year mean.

  Risks

  A slowdown in AI infrastructure capex, international customers shifting away from Chinese suppliers and causing share loss, server adoption of SOCAMM/LPDDRX weakening memory interface demand, and delays in DDR5 sub-generation migration and PCIe/CXL switch development.

• SG Micro (300661.SZ)

  Selected name; beneficiary of higher analog chip prices in China and domestic substitution

  Strengths

  Citi expects the 2H26 analog price uptrend to drive revenue and earnings upside; Chinese analog companies may see their first price hike since 2022; steady share gains could support revenue and profit growth.

  Weaknesses

  If the company pursues market share too aggressively, gross margin may come under pressure.

  Comparison

  The target price of Rmb120 is based on 61x 2027E P/E, set at the 5-year average valuation level.

  Risks

  Intensified price competition from global and Chinese peers, gross margin compression, tariffs causing excessive industry inventory build-up followed by correction, and inventory write-downs.

• CXMT and YMTC

  Industry supply variables; key names to watch in China's memory cycle

  Strengths

  Severe memory shortages make profitability strong and close to international memory makers; CXMT and YMTC can sell memory products at close to market prices.

  Weaknesses

  The market worries that expansion in Chinese DRAM/NAND supply will pressure prices.

  Comparison

  The report believes CXMT's existing main Hefei sites are already full and YMTC is more cautious on expansion, so an aggressive supply shock in 2026-27 is unlikely.

  Risks

  If new fabs come on stream faster than expected or expansion is more aggressive, DRAM/NAND prices could come under pressure.

Key data

• US roadshow timing and scope2026-07-13 to 2026-07-17; New York, Boston, San Francisco; more than 50 investorsUsed to form views on US investor sentiment and focus areas.
• Main investor concernsUS hyperscaler capex slows in 2027-28, Chinese DRAM/NAND supply increases, and Chinese AI models such as Kimi K3 disrupt the monetization of US AI modelsDespite the recent pullback in share prices, most investors still do not want to buy the dip.
• CXMT's existing main capacityMain Hefei sites are fully loaded, each at about 100k-120k wpmBased on this, the report judges that aggressive capacity expansion in 2026-27 is unlikely.
• Sector preference orderAnalog > OSAT > Power discreteThe report's ranking of 2H26 price-upside opportunities in China's semiconductor sector.
• ASMPT target price and valuationHK$250, based on 40x 2027E P/E; current price HK$161.2The target price implies about 55.1% upside.
• Chroma ATE target price and valuationNT$2,500, based on 40x 2027E P/E; current price NT$1835.0The target price implies about 36.2% upside; the report estimates that more than 60% of its revenue is AI-related.
• Montage-H target price and valuationHK$305, based on 66x 2027E P/E; current price HK$264.0The target price implies about 15.5% upside.
• Montage-A target price and valuationRmb245, based on 60x 2027E P/E; current price Rmb189.94The target price implies about 29.0% upside.
• SG Micro target price and valuationRmb120, based on 61x 2027E P/E; current price Rmb98.01The target price implies about 22.4% upside.

Impact & implications

The report's implication for Greater China semiconductors is that near-term market sentiment is pressured by concerns over AI capex and memory supply, but if Chinese memory expansion comes in below fears and 2H26 analog and OSAT price increases materialize, there is still room for earnings and valuation upgrades for related companies. The investment focus is more tilted toward companies with AI infrastructure orders, advanced packaging, connectivity chips, test equipment, and pricing leverage from domestic substitution.

Risks

• A slowdown in US hyperscaler capex in 2027-28 could weaken demand for AI semiconductors.
• If Chinese DRAM/NAND supply expansion exceeds expectations, memory prices could come under pressure.
• If Chinese AI models such as Kimi K3 disrupt the monetization of US AI models, future AI investment expectations may be affected.
• Companies tied to advanced packaging, testing, and AI infrastructure face risks of order delays, technology substitution, market share loss, and intensified competition.
• If price increases in analog and power discrete devices are accompanied by new capacity or price competition, earnings leverage may be lower than expected.
• Foreign exchange, tariffs, inventory build-up, and inventory write-downs may affect company earnings.
• Citi and its affiliates disclose market-making, trading, or non-investment-banking client relationships with ASMPT and Montage Technology, and investors should pay attention to potential conflict-of-interest disclosures.

What to watch

• Whether US hyperscaler capex guidance for 2027-28 is revised downward.
• Whether the DRAM upcycle continues through end-2027, and whether NAND prices hold up.
• The timing of CXMT's new fab ramp, capacity ramp-up speed, and YMTC's pre-IPO expansion strategy.
• Whether Chinese analog vendors truly achieve their first price increase since 2022 in 2H26.
• The sustainability of utilization rates and price increases at Chinese OSATs.
• ASMPT's TCB orders, progress in HBM and CoW applications, and potential disposal of the SMT business.
• Chroma ATE's AI-related revenue mix, and shipments of SLT, power tester, metrology, and photonics/CPO.
• Montage's product migration and customer adoption for DDR5 Gen3-5, MRDIMM, CXL, and PCIe retimer/switch.
• SG Micro's market share, gross margin, and inventory risk.